Timeline to repossess a car after bankruptcy

Written by James Hirby | Fact checked by The Law Dictionary staff |  

Read in: Spanish

The situation described has a lot of “… well, it depends …” in it.  The car company may have filed for repossession before the debtor filed for bankruptcy.  If so, the car company can pick up the car at almost any time.  Several people, and many worked for car companies and repossession companies stated that their experience was that repossession is often done at a time that is most hurtful to the debtor, such as being out doing chores, or out doing business, or at any inconvenient place and time.  It is hard to determine if this is so, but it does put out a message to the debtor.  If a repossession order has arrived in the debtor’s hands, do not use the care unless the repossession order is revoked, in writing.  Most states have law that allows the car company to repossess once certain delinquency time has passed.  As usual each state has its own variety of repossession laws.  Another point that came through from people is to not take advice received online as gospel.  Too often there are differing circumstances in the situation that are not brought out or evident.  These differences could be trouble.  The solid advice is to consult with a knowledgeable lawyer on your situation.

In the stated situation, if the car company did file for repossession but after the debtor filed for bankruptcy, the repossession order is null and void.  It is recognized that time lapses occur and correctly intentioned actions occur without knowing of any other inhibiting action.  Once the car company is notified of the bankruptcy filing, it must cease any repossession actions until the “341” creditors meeting and bankruptcy discharge.  The bankruptcy proceedings may vastly alter what the car company can do and will get for the car in the debtor’s hands.  Also, the debtor needs to be aware that the bankruptcy may not fully remove and further liability if the car is seized and returned to the car company.  The car company may be allowed to file a “discrepancies judgment” request to collect remaining loan debt, fees, and other legally applied charges.  In these situations sometimes states have laws and rules that supplement the Federal law, stating exemptions or liability limitations upon discharge.  This is where one’s lawyer earns its keep.  In some case where a car company did repossess the car after the bankruptcy was filed, the trustee will have the car returned to the debtor.  But, this is usually so that normal bankruptcy activities can occur.  The car, being a secured asset, can be seized and returned to the car company, or if the worth of the remaining part of the loan is dismissible, that might occur.

A few people did recommend dropping the car off at the car company to prevent any liability or damage if repossession was to occur at another place and time.  One does not know what might occur, so taking control of the situation and removing the item that could be a problem might be a smart thing to do.  Again, ask the lawyer.  Advising is their job.

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